Capital Flows, Exchange Rate Regime, and Macroeconomic Performance in Mexico

Carlos A. Ibarra

No RP2004-27, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: This paper analyzes the short-term effects of foreign capital flows on aggregate demand in Mexico: their magnitude, transmission channels, and the possible influence of the country's choice of exchange rate regime. The study is motivated by the introduction of a floating system in December 1994, in a context of renewed volatility of international capital flows. During the band period, in the early 1990s, capital flows different from FDI had a strong effect on both consumption and investment demand. The real exchange rate and stock market prices were important transmission channels.

Keywords: Capital market; Commercial policy; Foreign exchange; Monetary policy (search for similar items in EconPapers)
Date: 2004
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Persistent link: https://EconPapers.repec.org/RePEc:unu:wpaper:rp2004-27

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